RA hg

Customer Question

• Use the following information to complete Paul and Judy Vance’s 2010 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps. • You may need the following forms and schedules to complete the project: Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule SE, Form 2106-EZ, Form 4562 (for the dental practice), Form 4562 (for the rental property), Form 4797, and Form 8863. The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms. Facts: 1. Paul J. and Judy L. Vance are married and file a joint return. Paul is self- employed as a dentist, and Judy is a college professor. Paul and Judy have three children. The oldest is Vince who lives at home. Vince is a law student at the University of Cincinnati and worked part-time during the year, earning $1,500, which he spent for his own support. Paul and Judy provided $6,000 toward Vince’s support (including $4,000 for Vince’s fall tuition). They also provided over half the support of their daughter, Joan, who is a full-time student at Edgecliff College in Cincinnati. Joan worked part-time as an inde- pendent contractor during the year, earning $3,200. Joan lived at home until she was married in December 2010. She filed a joint return with her husband, Patrick, who earned $20,000 during the year. Jennifer is the youngest and lived in the Vances’ home for the entire year. The Vances provide you with the following additional information: • Paul and Judy would like to take advantage on their return of any educational expenses paid for their children. • The Vances do not want to contribute to the presidential election campaign. • The Vances live atXXXXX Cincinnati, OH 45211. • Paul’s birthday is XXXXX and his Social Security number is XXXXX • Judy’s birthday is XXXXX and her Social Security number is XXXXX • Vince’s birthday is XXXXX and his Social Security number is XXXXX • Joan’s birthday is XXXXX and her Social Security number is XXXXX • Jennifer’s birthday is XXXXX and her Social Security number is XXX-XX-XXXX. • The Vances do not have any foreign bank accounts or trusts. 2. Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000. The university withheld federal income tax of $3,375, state income tax of

Appendix C C-1 $900, Cincinnati city income tax of $375, $1,860 of Social Security tax and $435 of Medicare tax. She also worked part of the year for Delta Airlines. Delta paid her $10,000 in salary, and withheld federal income tax of $1,125, state income tax of $300, Cincinnati city income tax of $125, Social Security tax of $620 and Medicare tax of $145. 3. The Vances received $800 of interest from State Savings Bank on a joint account. They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. They paid interest of $1,100 on the loan. Paul received a dividend of $540 on General Bicycle Corporation stock he owns. Judy received a divi- dend of $390 on Acme Clothing Corporation stock she owns. Paul and Judy received a dividend of $865 on jointly owned stock in Maple Company. All of the dividends received in 2010 are qualified dividends. 4. Paul practices under the name “Paul J. Vance, DDS.” His business is located at
XXXXX Cincinnati, OH 45211, and his employer identification num- ber is 01-2222222. Paul’s gross receipts during the year were $111,000. Paul uses the cash method of accounting for his business. Paul’s business expenses are as follows: Advertising $ 1,200 Professional dues 490 Professional journals 360 Contributions to employee benefit plans 2,000 Malpractice insurance 3,200 Fine for overbilling State of Ohio for work 5,000 performed on welfare patient Insurance on office contents 720 Interest on money borrowed to refurbish office 600 Accounting services 2,100 Miscellaneous office expense 388 Office rent 12,000 Dental supplies 7,672 Utilities and telephone 3,360 Wages 30,000 Payroll taxes 2,400 In June, Paul decided to refurbish his office. This project was completed and the assets placed in service on July 1. Paul’s expenditures included $8,000 for new office furniture, $6,000 for new dental equipment (seven-year recovery period), and $2,000 for a new computer. Paul elected to compute his cost recovery allowance using MACRS. He did not elect to use §179 immediate expensing, and he chose to not claim any bonus depreciation. 5. Judy’s mother, Sarah, died on July 2, 2005, leaving Judy her entire estate. Included in the estate was Sarah’s residence (325 Oak Street, Cincinnati, OH 45211). Sarah’s basis in the residence was $30,000. The fair market value of the residence on July 2, 2005,

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

Ask a Tax Professional

Get a Professional Answer. 100% Satisfaction Guaranteed.

120 Tax Professionals are Online Now

Type Your Tax Question Here...

characters left:

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.